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THE STYLE FILES: THE PLAYERS : The People Who Never Make Headlines : The Money Man : HARVEY FEIG, Banker who collects for big labels: "We tell apparel companies who and what to avoid."


He doesn't dictate hemlines or consult on jacket silhouettes. Harvey Feig does, however, control the purse strings of some of the West Coast's biggest fashion labels. Among them, Jessica McClintock, Mossimo, Joe Boxer, Gotcha and Ocean Pacific.

Feig's official title is senior vice president / regional manager of the CIT Group, but in the apparel trade he's known as a factor. His branch of banking serves as the outside accounting and credit division for clothing manufacturers.

"An apparel manufacturer will use outside contractors to cut and sew their garments. They don't do it themselves because they need to keep track of overhead and don't want the expense of employing sewers," Feig says. "It's the same thing with credit and collections. Why take the risk of bad debts by selling to Merry Go Round or Macy's, both of which (have filed for bankruptcy protection)?"

Factors not only do simple credit checks but also send out late statements and collect debts. In most cases, they also prepay a store's debt, collecting a fee and interest in the process.

"We buy up the receivables. We own the bills," says Feig, a 26-year veteran of the factoring business. "So when the goods have been shipped, Nordstrom knows to pay the bill to us."

Feig says nearly 80% of his apparel clients ask for this kind of up-front money to take them from season to season. Although costly--generally a 1% commission on sales--such a service aids struggling new designers, who cannot always afford to wait 60 to 90 days to collect a debt.

Unlike a traditional bank, which makes loans on collateral and good credit, a factor banks on ideas. "We're much more flexible than a bank," he says.

"It's very subjective. . . . If we like the person, if their designs look good and we think they have talent, we'll back them." On the other hand, "there are people in this business who do not have the greatest reputations; who in the past have not done well and shown an ability to lose money. We look at the integrity of the person first, not the money."

Obviously, the risks of such a venture are enormous. "If a store goes bankrupt, we take the loss." Having a factor saved a number of struggling companies in 1991 and 1992, when retail bankruptcies were at a record high, he says.

"We tell apparel companies who and what to avoid--people who pay slow or not at all. Or people on the verge of bankruptcy," says Feig.

"It's very difficult for small fashion entrepreneurs to get this information on their own. It takes a great deal of time. And they don't have the access to extensive credit files that we do."

It can also take an enormous sense of humor. Unlike most bankers, Feig spends a good part of his day explaining his services to apparel makers in their offices. During one of these meetings with a women's lingerie supplier, a fashion show was going on next door and the models were using the executive offices as a changing room. Feig says it was all he could do to keep a straight face.

"A lot wilder stuff has happened," he says. "But I wouldn't want to get into that. Some of my clients might recognize themselves."

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